Key Strategies for Wrangling your Indirect Spend

Even companies with the most cost-effective, efficient operations can struggle with indirect spend.  Often not centralized and left in the hands of a variety of players in disparate locations, it’s all over the place.  

So, this post is dedicated to sharing some key strategies for wrangling your indirect spend to get it working for your operation and not against it.

The challenge of managing indirect spend

The wide array of categories in play makes indirect spend a challenge to manage effectively.  Managing the diverse supply chain involved can be daunting.

But spend per category tends to be lower with indirect spend.  When companies aren’t buying in volume, they don’t have the leverage they need to get the best pricing from suppliers.  But while that’s true, companies tend to order more frequently, across multiple categories. When this function is based on manual processes, it represents a profound drain on resources.

And when indirect spend is spread out across multiple locations or departments, things can get out of control quickly, due to cowboy spending.  An immediate need may compel employees to purchase for reimbursement, taking the purchases they’re making “off road”.

It’s the nature of the indirect spend that marginalizes it.  While principals are clear on the value of direct spend, the enormity of indirect spend is rarely scrutinized to arrive at strategies to make it a Center of Excellence.  Without control of the supply chain or the quality of goods being purchased, indirect spend is not as transparent in most operations as it should be.

The strategies

Without the executive tier’s buy-in, it’s unlikely you’ll be able to reform your indirect spend.  So, getting that first is the foundation of wrangling it.

Data is your friend, as you point out the largest areas of indirect spend to executives.  Analyzing that data and finding ways to rein in costs by knowing about the areas you’re presenting to them as targets for potential reform, demonstrates the need for change.  When you’re able to clearly show that you can do better, they’ll be on board

The largest areas of your indirect spend are where preferred suppliers should be established.  This change will rein in cowboy spending.  By consolidating suppliers in the bigger ticket categories, you get the leverage you need to cut costs, improve the supply chain and ensure quality.

Reduce manual input and create a sharper focus by using collaboration tools that manage indirect spend for you.  Data tells you what you need to know and automation cuts out manual processes.

While the numbers and types of vendors are many in indirect spend, there are four key KPIs which can make a difference.  These are compliance, competitiveness, continuous improvement and customer satisfaction.  Applying these as a test of your indirect spend’s effectiveness creates a framework for reform.

Wrangle it, with CenterPoint Group

Indirect spend is a challenge for many companies, but with CenterPoint Group GPO it’s met with focused expertise from a trusted procurement advisor, leveraging $850 million in collective indirect spend.

Contact us.  Let’s wrangle.

The post Key Strategies for Wrangling your Indirect Spend appeared first on Centerpoint.

source http://centerpointgroup.com/key-strategies-for-wrangling-your-indirect-spend/

Dealing with Outsourcing Supplier Instability

There’s no question that a certain amount of risk is to be expected when discussing suppliers.  Instability happens. But there’s no reason you can’t manage the potential for supplier instability effectively.  

While you may not be able to eliminate all the risk inherent with respect to suppliers, you’ll certainly be able to mitigate it by approaching it mindfully and with a strong plan to insulate yourself at least partially.

Let’s discuss dealing with outsourcing supplier instability and how to reduce the risk this really represents.

Doing the due diligence

Outsourcing agreements demand due diligence.  You need to have the highest level of confidence in the supplier you’re dealing with and to know that they’re as stable as possible.

Take the extra step of establishing the financial status of the supplier.  If they’re a subsidiary of a publicly-traded parent company, that information should be forthcoming.  You shouldn’t need to source information from the internet. In fact, a failure to provide you with that information when you ask for it is an obvious red flag.

In the case of a subsidiary, it’s not excessive to request a guarantee from the parent company as a schedule to your contract.

But establishing the stability of a supplier isn’t a one-time deal.  It’s an ongoing effort to ensure the integrity of the supply chain. This practice supports seeing potential problems before they become big uglies.

This is another part of your contractual agreement.  Putting it in writing establishes the fact that you intend to continue due diligence with respect to stability moving forward – something suppliers should readily comply with.

Other contractual concerns

We’ve discussed due diligence above and the imperative to include mechanisms to allow this in your contract.  But for due diligence to be effective, the remedies available and the rights of the customer when issues arise should be clearly stated.

When due diligence unearths a potential problem, your contract should include triggers for the right of termination, transition assistance (ideally with no extra financial obligation on your part), access to and training in the source code for the supplier and removal of restrictive covenants.

Prepare to negotiate for these and any other contractual protections.  Most suppliers want to limit triggers to bankruptcy, force majeure (natural disasters, for example) and other huge impediments like injunctions related to intellectual property.

Your purpose is to enshrine in your agreement the ability to act on what your ongoing due diligence reveals about potential risks, so be tough and get what you need to protect your company against potential instability.

Termination triggers should also be clearly stated and broadly defined.  While suppliers will litigate against these, you’ll be protected against events like sudden bankruptcy or supplier intransigence, like threatening to cease carrying on business.

Your company’s legal department is the key to dealing with outsourcing supplier instability.  Clear contractual definitions which protect you from the outfall of supplier instability are your best defense.

CenterPoint Group

CenterPoint is a trusted procurement advisor.  Let us revolutionize your procurement processes and strengthen your supply chain with the power of numbers.  Contact us.

The post Dealing with Outsourcing Supplier Instability appeared first on Centerpoint.

source http://centerpointgroup.com/dealing-with-outsourcing-supplier-instability/

Procurement Consulting: Tips for Getting the Most Out of Your Experience

If you’ve retained or are thinking about retaining the services of a procurement consultant, then you’re probably aware that your purchasing practices need a steadier hand.

And that’s exactly what procurement consulting can do for you.  Especially in the complex world of indirect spend, a procurement consultant can provide the insights, leverage and supply chain stability your company needs to get the most out of purchasing.

Let’s look at procurement consulting:  tips for getting the most out of your experience and get you ready to exploit your new relationship to optimal benefit.

Exchange knowledge

You know your strength and weaknesses.  That’s important information for a procurement consultant.  But you need reciprocation for the relationship to work.

What you’ll discover as you’re getting to know your consultant is that expertise you need is coming through the door.  But what your new team needs from you is total transparency – and your existing team needs that too. Everyone needs to be on the same page to derive everything you can from this relationship.

A procurement consultant worth its salt is going to work with the knowledge you share and provide solutions and focused expertise that get your purchasing solutions working for your company.

Share strategy

Hiring a procurement consultant doesn’t mean the process is completely out of your hands.  It’s a collaborative effort which involves devoting yourself to sharing strategy and the processes in place.  This gives your consultant a connection to what you do and to the people who do it for you – your employees.

Talking about your supply chain is important.  This provides your consultant with important insight and clarity, creating a window into what’s going right and what’s going wrong.

Communicate openly

Is there any obscure corner of life which wouldn’t benefit from a little clear, open communication?  No. Working with a procurement consultant is no different. Some people in your organization are going to be nervous about handing this function off to an outside influence.  But clear communication will serve to dispel any doubts. It will also get you the best results. How is a consultant of any kind to deliver the kind of benefit they’re capable of without keeping the lines of communication open and clear?

It’s that kind of forthright communication that can build a mutually beneficial relationship.

Be open-minded

All mutually beneficial relationships are built on trust.  Your procurement consultant is there to pull all the strands of your purchasing operation into a nice, tight bunch, bringing you fresh approaches and new ideas.  You may even find they bring you plum clients and reliable vendors.

Your consultant can also connect you to technology that takes human error out of the equation, opening the door to automation and data analysis that lets you see the big picture.

But you need to keep an open mind to let your consultant get all that done.

CenterPoint Group

CenterPoint is a Group Purchasing Organization that brings your company the power of numbers.  Contact us to revolutionize your procurement process.

The post Procurement Consulting: Tips for Getting the Most Out of Your Experience appeared first on Centerpoint.

source http://centerpointgroup.com/procurement-consulting-tips-for-getting-the-most-out-of-your-experience/

Non-Manufacturing Industries are Growing – and So Are Their Orders

In a November analysis, Anthony Nieves (Chair of the Institute for Supply Management) wrote that Non-Manufacturing Industries had grown for 106 consecutive months, as of writing.

That’s almost 9 years.

And that growth is reasonably consistent across the industries represented in the sector, from Scientific and Technical Services to Education, to Healthcare.  And in terms of orders for indirect spend items, they’re keeping up with growth and/or increased market presence by consuming more of them. The Non-Manufacturing New Orders Index is now at a steep 62.5%.

And with that need, come challenges with respect to budget realities and increasing prices for indirect spend office supply necessities like paper.  Hit hard by tariffs and the one-two punch of pulp mill price increases and a resulting spike in the cost of paper, the entire line item is spiraling out of control for some companies.

But with CenterPoint Group, you get the power of numbers and personalized service that ensures you’re getting the best deal possible.  We’re a Group Purchasing Organization that leverages over $850 million in collective indirect spend for our members. That brings them price stability, the heft of a collective spend individual entities don’t have and the security of a stable, highly-functional supply chain.

Non-Manufacturing Industries are growing – and so are their orders.  But why should they be at the mercy of unforeseen price increases and realities like costly tariffs?

Now’s the moment

Nieves’ analysis of the Non-Manufacturing sector also revealed that deliveries were slower in the month of November. While at least some that effect has to do with the time of year, this was Supplier Deliveries’ 35th consecutive month of slowdowns – almost 3 years of product delivery slowdowns.

Supply chain blips can cost you money unnecessarily.  CenterPoint Group members know that we partner with suppliers to ensure our next day delivery.  There’s never any question you’ll have what you need when you need it.

But that’s just another key facet of what CenterPoint does for its members.  We’re a “hands-on” procurement advisor managing your indirect spend to ensure you’re protected against precipitous price increases.

With CenterPoint, you’re not alone.  Sudden price increases are distributed across a larger infrastructure with more abundant, pooled resources.  And across each spend, even more, the impact is absorbed. That’s the power of numbers, brought to you by GPO procurement.

With 18 Non-Manufacturing Industry spaces reporting increased prices as of Nieves’ November 2018 analysis, people are feeling the pinch.  With pulp and paper prices projected to grow and tariffs stubbornly entrenched for the moment, now’s the moment for Non-Manufacturing Industry players to claim the power of numbers.  For leverage that’s got you covered, contact us.

The post Non-Manufacturing Industries are Growing – and So Are Their Orders appeared first on Centerpoint.

source http://centerpointgroup.com/non-manufacturing-industries-are-growing-and-so-are-their-orders/

Price Increases in Office Supplies in 2019

In case you hadn’t noticed, the price of office supplies (paper in particular) is steadily rising.  Part of that trend is the impact of the recent US tariffs. This reality was readily seen in an almost 15% price increase for copy paper.  

And part of the reason for price spikes for paper products is the steadily rising cost of pulp.  Mills have been inflating their pricing since February 2017. Thus far, a precipitous rise of 25% has been seen and that’s expected to continue into 2019.

Paper mills don’t just absorb that additional material cost – they pass it on to business consumers like you.  This year alone, there have been 4 distinct price increases and like pulp, like paper – someone’s going to pay for the pulp industry’s burgeoning pricing model.  After 20 years in the commercial wilderness as the rise of the internet radically reduced paper production needs, the pulp industry is in funds recovery mode.

Someone’s got to pay for that recovery, but must it be you?

Price increases in office supplies in 2019 demand creative solutions that get your company the leverage it needs to hold the line on market fluctuations and the application of tariffs.

The GPO solution, with CenterPoint Group

Managing an indirect collective spend of over $850 million, CenterPoint partners with members to routinely deliver below market pricing.  This is a creative way to mitigate unforeseen price increases that bust your budget.

Our organizational relationships with Office Supply companies as well as other key categories are strong, allowing us to manage the vendor on behalf of members.  MRO, Industrial and Facility Supplies and Safety & PPE are other pivotal connections we engage to service our members with a better deal and a stronger supply chain.

We’re a Group Purchasing Organization (GPO) and trusted procurement advisor, investing our members with the power of numbers.   That power not only reduces their overall spend, it protects them from sudden price increases like those currently being experienced with respect to office supplies, especially paper products.

Just the facts

With CenterPoint at work, you don’t have to track price fluctuations.  We closely monitor the paper market on behalf of our members, ensuring that increases are foreseen and that pricing is maintained.  For 4 years running, we’ve been able to do just that for our members.

But recent increases have challenged us.  CenterPoint met that challenge for our members, in a market in which end-user costs increased dramatically, at 15%.  Our members were able to weather the storm with a much less staggering increase, at only 4%. When absorbed into a total spend, that amount is reduced even further, to just 1%.  

That’s below the Consumer Price Index.

Optimization

Optimizing your spend with the power of numbers, CenterPoint Group is able to deliver significant savings and budgetary stability.  That power also provides you with ballast to whether the market’s whims and the costly impact of tariffs.

CenterPoint Group brings you the power of numbers, preparing you for the unexpected.  Contact us.

The post Price Increases in Office Supplies in 2019 appeared first on Centerpoint.

source http://centerpointgroup.com/price-increases-in-office-supplies-in-2019/